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Senior benefit costs up sharply

Thu., Feb. 14, 2008

The cost of government benefits for seniors soared to a record $27,289 per senior in 2007, according to a USA Today analysis.

That’s a 24 percent increase above the inflation rate since 2000. Medical costs are the biggest reason. Last year, for the first time, health care and nursing homes cost the government more than Social Security payments for seniors age 65 and older. The average Social Security benefit per senior in 2007 was $13,184.

“We have a health care crisis. We don’t have an entitlement crisis,” said David Certner, legislative policy director of AARP, which represents seniors.

He said seniors shouldn’t be blamed for the growing cost of government retirement programs.

The federal government spent $952 billion in 2007 on elderly benefits, up from $601 billion in 2000. It’s the biggest function of the federal government. States chipped in another $27 billion in 2007, mostly for nursing homes.

All three major senior programs – Social Security, Medicare and Medicaid – experienced dramatically escalating costs that outstripped inflation and the growth in the senior population.

Benefits per senior are soaring at a time when the senior population is not. The portion of the U.S. population age 65 and older has been constant at 12 percent since 2000.

The senior boom, however, starts big time in 2011 when the first baby boomers – 79 million people born between 1946 and 1964 – turn 65 and qualify for Medicare health insurance. The oldest baby boomers turn 62 this year and qualify for Social Security at reduced benefits.

USA Today used a variety of government data to calculate the cost of providing Social Security, medical benefits and long-term care to an aging population. Billions of dollars paid to non-seniors – the disabled, children and others in the programs – were removed to create an estimate that focuses exclusively on seniors.

Findings include:

•Medicare experienced the most explosive growth from 2000 to 2007. The Medicare prescription drug benefit, started in 2006, accounts for about one-fourth of the increase in Medicare, which provides health benefits for people 65 and older.

•Long-term care costs per senior have declined slightly in the last three years because of a move away from nursing homes to less-expensive home care.

•The cost of senior benefits is equal to $10,673 for every non-senior household.

•About 35 percent of the federal budget is spent on senior benefits, up from 32 percent in 2004.


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